CTA Positioning Shifts as U.S. Firms Prepare $1.3 Trillion in Buybacks

U.S. companies have authorized about $1.3 trillion in stock buybacks this year, while a sharp shift in CTA positioning has unwound much of the long exposure built earlier, shaping the market backdrop as the fourth quarter begins.

The CTA positioning Z-score fell from +2.35 at the end of August to −0.80, a swing of more than three standard deviations in one month. The move indicates that previously accumulated long positions were significantly unwound.

Some corporate repurchase programs are expected to restart after Oct. 15, when third-quarter earnings quiet periods end. Buyback activity has typically increased further in November.

Seasonal figures show the S&P 500 has gained an average of 5.6% in fourth quarters during U.S. midterm election years since 1930. Across all years, the index’s average fourth-quarter gain was 2.9%.

Technology shares are also part of the market backdrop. Nasdaq 100 futures are nearing resistance at 31,200, while the Philadelphia Semiconductor Index has moved above a short-term resistance level and is approaching a record high.

Cloud providers could issue $420 billion in bonds in 2027. Their interest costs remain a relatively small share of earnings; related companies have net leverage of about 0.4 times and cash equal to 132% of debt.

Oil is another fourth-quarter factor. Global crude inventories have a thinner buffer, and a $100 oil price is consistent with the current supply-and-demand balance.